Despite government attempts to shore it up, Argentine debt suffers the ups and downs of the global market. After the rally it recorded in January, this Monday it extends the declines it had presented towards the end of last week and this midday up to 3%. Fears in global markets tick the pulse of a wheel where Even Argentine stocks on Wall Street lose up to 3.5%.
Just under three weeks ago, Economy Minister Sergio Massa announced a debt buyback to “maintain parity” of debt securities and lower country risk. The market mistrusted this measure and read that the government was using a new way to intervene in the price of the financial dollar. Meanwhile, a shift in global expectations has put pressure on Argentine bond prices.
After jumping more than 20% in January, 2020 public stocks accumulate decreases in the first 4 wheels this month up to 7.6%. it’s just the Global 2030 in dollars, the security that captured more than 90% of the debt repurchase operations carried out by the Centrale, the one that goes the furthest.
Global humor is what ultimately gets the pulse racing. After a data on employment in the United States which anticipated a possible higher wage pressure in that country and which would jeopardize the disinflationary process started, this Monday the rate on the 10-year Treasury bill rose to 3.61% and all emerging country bonds suffered losses.
“Waiting for new signals from (Federal Reserve head) Jerome Powell, especially after Friday’s strong jobs data, Wall Street has reverted to more caution, while ‘macro’ data and corporate balance sheets continue to be analyzed after the start of a positive year”, said the economist Gustavo Ber. In this context, “finally, domestic assets also take the opportunity to test more determined profit taking,” He added.
PPI analysts said: “The adverse international climate coupled with a buyback program with questionable benefits could deepen the rotation from short to longer bonds. For example, the AE38 versus the GD30 looks quite attractive in terms of historical prices, but the same can be traced against other instruments such as the GD38 or the GD35”.
External pressure is also being felt in the stock market. Argentine newspapers on Wall Street lost nearly 4%, with Irsa Propiedades Comerciales leading the way. In this climate, the index Merval drops more than 2% and accumulates a 6.5% drop since its close in January.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.